Experts in Personalized Retirement Plan Design & Administration Newsletter 01.04.18

Small Employer Credit for Retirement Plan Start-Up Costs  For small employer retirement plans, a tax credit of up to 50% of the first $1,000 in “eligible start up costs” may be available to offset establishment and administration costs. This credit is available for each of the first three years of the plan. Source:

SEPs vs 401k Safe-Harbor  This chart compares a SEP with a safe-harbor 401k plan and is especially important for employers who must cover participants other than just the owners. Source:

How to Kick-Start Your Retirement Savings in 2018  It doesn’t matter whether you’re 20 or 60. You need to be saving for retirement. If that’s something that’s been on the back burner, make 2018 the year you focus on preparing for your future. Source:

Four Questions to Ask Before Doing a 401k Plan Re-Enrollment  Employers do re-enrollments to make sure plan participants have appropriate asset allocations and savings rates. Having a process to help plan sponsors with 401k plan re-enrollments is becoming table stakes for retirement plan advisers. Source: (registration may be required)

What Has Your 401k Plan Advisor Done for You Lately?  The lack of thorough service by plan advisors of 401ks is not sitting well with plan sponsors. In an annual Plan Sponsor Attitudes survey, 38% of sponsors are looking to switch advisors, up from 30% in 2016 and 9% in 2013. Advisor complacency, coupled with a need for more knowledgeable advisors, is prompting the switch. Source:

Three Money Mistakes That Could Ruin Your Retirement  More than 40% of pre-retirees say running out of money during retirement is their greatest fear, and six in 10 older Americans are actually more afraid of spending their retirement stash than they are of dying. To avoid running out of cash, it’s important to avoid mistakes that could undermine your efforts at financial security, like these three big blunders that could ruin your retirement. Source:

What Does the New Year Hold? Three Predictions for 2018  The trends that unfolding in the coming year are well-trod ground at this point without any radical shifts; mostly extensions of trends already in place. Captrust Senior Director John Curry outlines predictions for plan sponsors, participants, and the retirement industry in general in the new year. Source:

Fiduciary and Plan Governance Material

Plan Sponsors Need to Deal With a Whole New 401k World  Retirement plan sponsors need to understand the increased potential liability as plan fiduciaries and the best way to understand the changes that have taken place in the 401k plan business over the last 20 years. This article will let 401k plan sponsors understand how and why they need to be more vigilant in their role as a 401k plan fiduciary. Source:

Whether a Plan Sponsor Should Hire an ERISA 3(16) Administrator  When it comes to a 401k plan, there is a difference between outsourcing and delegation. This helps 401k plan sponsors understand what outsourcing plan administration with an ERISA Section 3(16) administrator entails and the traps you should avoid if you choose that route. Source:

Insight: Studies, Research, and White Papers

Canadian Plan Sponsors Favoring Group RRSPs, DPSPs Over DC Plans  Canadian employers in search of simpler retirement products for their workers are looking to group registered retirement savings plans and deferred profit-sharing plans as a solution, say experts at capital accumulation plan providers. Source:

How Much Do Participants’ Negative Behaviors Affect Retirement Readiness?  Participants dipping into retirement savings early and suspending contributions to their 401k plans is projected to reduce their retirement savings by 14% percent on average, new analytics from MassMutual show. Source:

New Evidence on the Demand for Advice Within Retirement Plans  Using participant-level data from TIAA, this study sheds new light on demand for advice within retirement plans. In addition to examining how demand varies based on participant demographics, the authors explore how demand is affected by default investment options and the means by which advice is offered. Source:

DC In-Plan Retirement Income Solutions: Are We There Yet?  The decision to offer an in-plan retirement income solution is a fiduciary decision that rises to the top of potential concerns. The market and appetite for these options continues to evolve. This article reviews the options available to plan sponsors and provide an update on developments within the industry. Source:

Four Canadian Pension and Retirement Trends to Watch in 2018  As 2017 draws to a close, we turn our attention to the new year. As usual, there’s a lot happening in the Canadian pension environment. Here are four pension trends to watch in 2018. Source:

Troubling 401k Trend for Hispanic Workers  Less than 10 percent of small business workers in the five top Hispanic metro areas of the United States have access to employer-sponsored retirement savings accounts. Additionally, according to a recent study from Finhabits, the states with the largest concentration of Hispanic residents had the lowest participation in retirement savings. Source:

Items of Special Interest to Service Providers

2018 Predictions for 401k Advisers, Distributors and Recordkeepers  Aon Hewitt Investment Consulting must defend allegations that it acted imprudently by selecting and monitoring certain investment options, including JPMorgan’s target-date funds, in Safeway’s 401k plan. Source: (registration may be required)

A Bunch of Reasons to Use More 401k Fintech  Technology’s cool and compelling, yet far too many advisors rely on innovation of old. Using an estimated 10 percent of their platforms’ full capabilities on average at best, they’re not helping their participants, or themselves. Source:

Four Steps to a Successful 401k Business Brand Audit  Branding is a natural starting point for working on your practice and yet often overlooked. A crucial step is the brand audit, which in essence asks how well you articulate your brand, and in what mediums. Source:

403b Plans

Fee Structure and Evaluation in 403b Plans  This 13-page PSCA 403b Snapshot Survey reflects responses from 250 not-for-profit organizations that currently sponsor a 403b plan. The survey was conducted online in October/November 2017 and asks sponsors questions regarding how plans fees are structured, administered, and evaluated. Source:

Survey: 403b Sponsors Need More Information on Their Plan Design  PSCA’s annual survey shows that 403b plans have made significant improvements in plan administration. This snapshot survey highlights how additional focus evaluating fees and expenses as well as implementing a prudent, documented process might help to mitigate the risks plan fiduciaries face. Source:

403b Loans: Maximums and Cure Periods  In 2017, the IRS issued two memoranda regarding 403b plan loans and how those loans should be administered. First, in April, the IRS presented two different options to calculate loan maximums under Internal Revenue Code Section 72(p). The second IRS memorandum focused on cure periods. This article reviews the details. Source:

Court and Legal

Sixth Circuit Holds That a Divorce Decree Should Be Treated as a QDRO  Upon reviewing the case, the Sixth Circuit Court of Appeals stated that the divorce decree suffices as a qualified domestic relations order that “clearly specifies” plaintiff as the beneficiary under ERISA, 29 U.S.C. Section 1056(d)(3)(C), so that plaintiff is entitled to the benefit from the plan specified in the divorce decree. Source:

Fifth Circuit Borrows One-Year Statute of Limitations for Section 502(c)(1) Claim  The Fifth Circuit held that the statute of limitations for an ERISA Section 502(c)(1) claim — a claim for penalties for failure to provide certain documents within thirty days of a written request — was subject to a one-year statute of limitations. Source:

ERISA Litigation Landmarks Set the Stage for 2018  One ERISA attorney who specializes in defending employers against fiduciary breach claims says 2017 has delivered no shortage of important, potentially precedent-setting decisions involving employee benefits law; and the stage is set for another whirlwind of a year in 2018. Source:

Princeton Retirement Plan Lawsuit Paused by Judge  A lawsuit challenging the fees and investment options in Princeton University’s retirement plan will be put on hold until a federal appeals court considers a similar case against the University of Pennsylvania. Source: (registration may be required)

Stable Value Lawsuits and the Goldilocks Zone  Even though there is no typical stable value fund, heading into 2018 there have been three typical types of lawsuits filed against fiduciaries offering stable value funds, according to ERISA attorneys with Mayer Brown. Source:

Plaintiffs Lack Standing to Bring ERISA Fee Litigation Case  A federal district court in Georgia dismissed claims by participants in Delta Air Lines 401k plan who alleged that Delta breached its ERISA fiduciary duties by allowing the plan to invest in funds that allegedly charged excessive fees and unperformed against comparable funds. Consistent with rulings in other jurisdictions, the court held that plaintiffs lacked Article III standing because they failed to allege that they were invested in the challenged funds or that they paid excessive fees. Source:

Settlement Agreement May Conclude Allianz Self-Dealing Challenge  Along with non-monetary relief, Allianz will pay $12 million into a common fund for the benefit of class members, to be allocated pro rata among the members in proportion to their account balances in the plan during the relevant period. Source:

Noteworthy Federal Cases Relating to Employee Benefit Plans in 2017  Here is a round up of cases decided by the U.S. Supreme Court and the First and Second Circuit Courts of Appeals in 2017 involving ERISA employee benefit plans. Source:

Legislative and Washington DC

Tax Reform: IRAs, Qualified Plans, 529s, and Other Savings Arrangements Impacted  The Bill will affect retirement and other tax-advantaged savings arrangements and, in some cases, will become effective as soon as it is signed. Highlights of the changes made to savings arrangements and their effective dates are described here. Source:

Tax Reform: Retirement Plan Changes in the Tax Cuts and Jobs Act  While many retirement plan changes had been included in the separate bills passed by the House and the Senate, only a few survived the committee of House and Senate members that was convened to hammer out the differences between the two versions of the bill. The Act makes significant changes to both individual and corporate taxation, it only makes modest changes to retirement plans. Here is a brief summary. Source:

Senate Confirms Rutledge to Key DOL Post  The successor to regulatory powerhouse Phyllis Borzi who preceded him, supporters and detractors alike note Rutledge is very familiar with the responsibilities of the role, and industry advocacy groups praised the nomination and confirmation. Source:

New DOL, SEC Officials Help Advance Fiduciary Rule Work  Three new officials — one at the Labor Department and two at the Securities and Exchange Commission — will help the agencies advance their work on investment advice standards. Senate confirms Preston Rutledge to key Labor Department role, while Hester Peirce and Robert Jackson Jr. join SEC as commissioners. Source: (registration may be required)

The New Tax Bill Is Enacted: What Does This Mean for Retirement Plans?  The bill makes very few benefits changes directly, although the change in the tax structure contained in the bill may affect retirement plan formation and maintenance. Here is an initial take on the new law’s effect on retirement plans. Source:

Bill Proposes Enhancements to Auto Enrollment, RMD, and Other Retirement Plan Rules  Representative Richard Neal has introduced the Retirement Plan Simplification and Enhancement Act of 2017. The legislation would significantly modify current rules for individual retirement arrangements and employer-sponsored retirement plans. The bill aims to expand retirement plan coverage, preserve retirement income, and simplify retirement plan rules. Source:

DOL’s Fiduciary Rule

Reporting Emerges That Many DOL Fiduciary Rule Comments Could Be Fake  The Wall Street Journal published an analysis this week suggesting “at least five governmental agencies have received fake comments challenging the agencies’ rules,” including the Department of Labor; the DOL is so far declining additional comment. Source:

Compliance and Regulatory

Puerto Rico Treasury Issues Guidance on Retirement Plan Limits for 2018  On December 15, 2017, the Puerto Rico Treasury Department issued Circular Letter of Tax Policy 17-02 (CLTP 17-02), formally announcing the key pension limits for 2018. Source:

PBGC Offers Missing Participants Program to DC Plans  PBGC is expanding its Missing Participants Program to terminated defined contribution and other plans in an effort to connect more people to their retirement savings. The expanded program is voluntary for DC and small professional service plans and will be available for plans that terminate on or after January 1, 2018. Source:

2018 Key Administrative Dates and Deadlines for Calendar-Year DC Plans  This is a 5-page retirement plan chart and 2018 calendar for defined contribution plans, published Milliman. The document provides key administrative dates and deadlines for calendar-year plans. Source:

Common Issues Discovered During Retirement Plan Audits  Diane Wasser of EisnerAmper LLP, a national certified public accounting firm with a practice group specializing in the audit of retirement plans, discusses common issues that Diane and her team discover during their audits of retirement plans. Source:

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